Correlation Between Capitec Bank and Copper 360

Can any of the company-specific risk be diversified away by investing in both Capitec Bank and Copper 360 at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Capitec Bank and Copper 360 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Capitec Bank Holdings and Copper 360, you can compare the effects of market volatilities on Capitec Bank and Copper 360 and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Capitec Bank with a short position of Copper 360. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capitec Bank and Copper 360.

Diversification Opportunities for Capitec Bank and Copper 360

0.16

Correlation Coefficient

Capitec Bank  Copper 360

Average diversification

The 3 months correlation between Capitec and Copper is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Capitec Bank Holdings and Copper 360 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Copper 360 and Capitec Bank is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Capitec Bank Holdings are associated (or correlated) with Copper 360. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Copper 360 has no effect on the direction of Capitec Bank i.e., Capitec Bank and Copper 360 go up and down completely randomly.

Pair Corralation between Capitec Bank and Copper 360

Assuming the 90 days trading horizon Capitec Bank Holdings is expected to generate 0.41 times more return on investment than Copper 360. However, Capitec Bank Holdings is 2.47 times less risky than Copper 360. It trades about 0.04 of its potential returns per unit of risk. Copper 360 is currently generating about -0.09 per unit of risk. If you would invest  31,299,100  in Capitec Bank Holdings on December 28, 2024 and sell it today you would earn a total of  916,300  from holding Capitec Bank Holdings or generate 2.93% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

Capitec Bank Holdings  vs.  Copper 360

Capitec Bank Holdings

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Capitec Bank Holdings are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Capitec Bank is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Copper 360

Risk-Adjusted Performance

Very Weak

Over the last 90 days Copper 360 has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Capitec Bank and Copper 360

The main advantage of trading using opposite Capitec Bank and Copper 360 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capitec Bank position performs unexpectedly, Copper 360 can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Copper 360 will offset losses from the drop in Copper 360's long position.

The idea behind Capitec Bank Holdings and Copper 360 pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Money Managers module to screen money managers from public funds and ETFs managed around the world.